In June 2018, the South Dakota v. Wayfair, Inc., 138 S. Ct (2018) landmark ruling by the Supreme Court changed the way nexus is applied to businesses, and expanded the requirements for withholding and remitting sales tax. The ruling overrode the long-standing physical presence test and states can now require sales tax collection and remittance based on economic nexus. For more information on the ruling, please see our article using the link at the bottom.
Along with these expanded reporting requirements, there may be many unsuspecting officers and managers open to personal liability if their companies don’t fulfill their payment obligations, based on the “responsible party” rules in many states.
A few examples of state required information are:
- In Florida, even if sales are online-only, businesses must register to collect sales tax. The registration form requires the owner’s SSN, unless the entity is a corporation, business trust, non-business trust, estate or Indian tribe.
- Texas requires each officer or director of a corporation to provide their social security numbers just to open a sales tax account.
- Responsible parties must be identified when registering for Georgia sales tax or they risk having all of their officers considered responsible.
- In Maryland, the president, vice president, or treasurer of a corporation, regardless of whether he or she oversees or manages financial or tax matters, may be held liable for sales tax debts.
It is critical that companies with interstate sales evaluate their exposure to sales tax liability. Using the threshold of 200 transaction or total sales over $100,000 in the state annually is a good way to gauge the potential need to register in multiple states. In addition to tangible goods, companies providing services and digital products are more susceptible than ever, which leaves responsible persons for those companies open to greater personal risk.
Please click this link for more information on the Wayfair decision